Bankruptcy court judge Steven Rhodes will allow pension funds opposing the Detroit bankruptcy to appeal directly to the U.S. Court of Appeals, bypassing the U.S. District Court. The pension funds claimed that the expedited bankruptcy proceedings necessitated the expedited appeals process following a ruling in the San Bernardino bankruptcy case in California.
Just as in the California case, Detroit pensions claim that the city’s bankruptcy should not be allowed to proceed because they did not negotiate in good faith with creditors. Previously, the bankruptcy court had ruled that Detroit may cut pension obligations as part of a move to relieve itself of crushing debt. While some believed that a prohibition against pension cutbacks in the Michigan state constitution would protect Detroit’s pensioners and workers in bankruptcy, Rhodes stated that it did not provide “bullet proof” protection. Detroit is $18 billion in debt, of which $3.5 billion is owed to 23,000 retirees and 9,000 workers. A plan to exit bankruptcy is slated to be completed by March 1.
